Teck Long
Global Wholesale Banking
In my view, 2023 was a challenging year. Headwinds in geopolitical tensions and global trade persisted. The impact of China’s reopening was weaker than expected. This was duly reflected in our proprietary OCBC SME Index, a measurement of SME business health and performance in Singapore, which turned contractionary in 2023. The Index had been in expansionary range for eight consecutive quarters over 2021 and 2022.
The Wholesale Banking Division was able to navigate the volatile economic landscape successfully, achieving another record operating profit in 2023, 40% higher than a year ago. This was supported by interest rate hikes, broad-based loan growth and higher non-interest income.
We continued to see growth momentum in core strategic sectors including digital infrastructure, telecoms, media and technology, and sustainability-related industries such as renewable energy. A notable project that we supported last year was the launch of a 192 MW floating solar project in Taiwan’s Changhua Coastal Industrial Park. Operating in saline water instead of the conventional freshwater reservoir-based systems, this project represents a significant step forward for the renewable energy sector.
To better support increasing ASEAN-Greater China trade and investment flows, we expanded our Greater China Business Office coverage to include Vietnam. With the expanded network that includes Singapore, Malaysia, Indonesia and Thailand, we were able to better support Greater China corporates investing in ASEAN.
We continued our digitalisation efforts to acquire and deepen our relationships with customers as well as to improve customer experience.
In Malaysia, we rolled out a digital Shariah-compliant business account – OCBC eBiz Account-i – that can be opened entirely online. This builds on the highly successful and fully online OCBC eBiz Account that was launched in July 2021, which has consistently garnered over 10,000 sign-ups each calendar year.
We launched new QR collections options on our OneCollect platform, which lets merchants collect payments through a QR code. Monthly transactions on OneCollect grew 2.5 times from January 2023 to December 2023. The number of merchants registered grew by about 30 per cent in the same period.
We continued to enhance our Velocity and Mobile Banking platforms with new capabilities. Nearly 70 per cent of our trade finance customers in Singapore have done away with traditional paper applications and now apply online for trade solutions such as import letters of credit, banker’s guarantees and trade loans. We also launched 35 new currencies for international payments, bringing the total to over 60 currencies.
In recognition of our efforts, we were awarded the Best Transaction Bank in Singapore, as well as the Best Corporate Mobile Initiative – “OCBC Business App” at The Asian Banker Transaction Finance Awards.
Towards a Net Zero ASEAN and Greater China
Our sustainable finance loan commitments surpassed $50 billion in 2023, well ahead of our targeted timeline of 2025. Particularly for SMEs across the region, we saw promising traction in their energy transition plans. Their take-up of sustainable financing doubled year-on-year to reach over $7 billion, with the number of borrowers doubling to more than 1,200.
In May 2023, we unveiled science-based decarbonisation targets for six high-emissions intensive sectors – Power, Oil and Gas, Real Estate, Steel, Aviation and Shipping – and the key actions that the Bank will take to meet these targets as part of our commitment to achieve Net Zero in our financed emissions by 2050.
In addition, we committed not to extend project financing to upstream Oil and Gas projects that obtained approval for development after 2021. This is on top of the target (a 35% reduction in absolute emissions by 2030 for the Oil and Gas sector) that the Bank had set.
To drive this transition journey, we have developed sustainable financing solutions for our corporate clients to finance their green and transition business activities. The OCBC 1.5°C loan is one such example. A first-to-market sustainable financing solution, the loan incentivises corporates to set, and work towards, clear emissions reduction targets aligned with internationally recognised, science-based decarbonisation pathways for their sectors. The first OCBC 1.5°C loan was extended to Singapore’s leading sustainable developer City Developments Limited.
Our commitment to sustainability earned us the Best Bank for Sustainable Finance in Singapore award at the Global Finance Sustainable Finance Awards 2023, as well as Management Award for Net Zero Contribution (Banking Industry) at the Hong Kong Green and Sustainable Finance Awards 2023.
Looking ahead
The macroeconomic outlook for 2024 remains volatile with continued geopolitical tensions, de-globalisation and expectation of rate cuts.
We will continue to tap ASEAN-Greater China flows, further build expertise in core strategic sectors globally, maintain our leadership in our SME franchise in Singapore and challenge incumbents for SME businesses in our core markets outside Singapore.
We will also stay focused on building up our product capabilities, putting emphasis on transaction banking products, investing in digital and data capabilities to grow the customer franchise, and streamlining processes to improve the employee experience.
Specifically, to build up our transaction banking capabilities in Greater China, the Bank will invest more than $50 million over the next three years. We target to achieve more than 500 regional mandates for cash management over the next five years.
Sustainability will continue to be of importance to us, with the strategic focus firmly placed on transition advisory and financing. We will continue to roll out new, innovative products to support our customers in their Net Zero ambitions.
Despite ongoing headwinds on the horizon, we remain steadfast in our commitment to clients. We are well-equipped to support them in navigating the challenges that lie ahead, with our deep understanding of local market dynamics, ever-growing digital capabilities and diverse sectoral expertise.
